The present invention relates generally to the field of economics. More particularly, the present invention relates to a system and a method for predicting and projecting market penetration and evaluating advertising and promotional impact.
For more than twenty years, the planning and buying of television advertising has been based on the concept of effective frequency. A compilation of research is provided in Effective Frequency: The Relationship Between Frequency and Advertising Effectiveness, by Mike Naples (1979) recently updated by Colin McDonald (1996). A key concept set forth in the book is that a single exposure is not enough to create a desired sales effect; most media planning models assume an effective frequency of three. In part based on this concept, a majority of television media plans are xe2x80x9cflightedxe2x80x9d, that is, weeks of dense exposure are followed by weeks off-air. Off-air weeks are necessitated by the cost of acquiring enough air time to provide for an effective frequency of three at whatever level of reach is desired. The belief in effective frequency causes advertisers to plan to be off-air rather than expose their advertising at frequency levels below the targeted three.
Over the last several years a number of publications have changed the perception of effective frequency. The works of John Philip Jones, particularly When Ads Work (1995), are seminal to the changes taking place in the concept of effective frequency. Using single-source data and a share-based analytical scheme, Jones has examined purchases within one week of ad exposure, finding that a single exposure within that time period produces the majority of the positive share effect. While additional exposures beyond the first produce small gains, Jones concludes that effective frequency is in fact one, and that continuity of airing, rather than flighting, should be the advertiser""s goal.
Expanding on the work of Jones, Ephron (1995) draws media conclusions that (weekly) reach should be the planning and buying criteria, that being off-air, as required by the flighting pattern, is equivalent to being out-of-stock at the point of sale. Ephron uses a concept of recency to explain the manner in which a single exposure of advertising works. He postulates a pool of xe2x80x9cthis week""s buyersxe2x80x9d which may be affected by the advertising which airs this week, plus a pool of xe2x80x9cnext week""s buyersxe2x80x9d which may be affected by next week""s airings, but which are unaffected by this week""s advertising exposures, and so on forward in time. Thus continuity of exposure is rewarded, and off-air weeks (which result from flighting to gain frequency of exposure greater than one on the air), penalize a brand.
These publications illustrate that the study of advertising marketing effects on products"" sales performance is an important area of study and concern for product manufacturers. First time buyers due to advertising are likely to be repeat buyers.
FIG. 4 provides an example of a study of advertising activity. Referring to FIG. 4, a chart titled IN STORE CONDITIONS is shown. The chart above shows an objective measure of the level of temporary price reduction (TPR) activity, measured in percent % of All Commodity Volume, a measure which weights large and small stores by the volume of all goods sold. Weeks designated by a bulls eye were counted as promotion weeks (Prom. Period). Weeks designated by a bullet were counted as non-promotional weeks.
Unfortunately, to get a true evaluation of the effectiveness of any advertising campaign a baseline must be known which represents what the expected for a particular product would have been absent the advertising promotion. To attempt to model the same, companies/manufacturers look to numerous consumer polling groups for information in order to approximate what the expected value of these data points would be, e.g to understand the effectiveness of an advertising campaign.
For example, AC Nielsen, Inc., and Information Resources, Inc. (IRI) work in the area of modeling advertising effects. Media Marketing Assessment (MMA), Hudson River Group and Millward/Brown also work in this area. These entities utilize aggregate data plugged into extremely complex equations having forty to fifty parameters. Perhaps seventy to eighty estimates are made to aggregate back to the national estimate cumulating data. From this sort of convoluted data manipulation, these groups offer their analyses.
Bases, which is presently a division AC Nielsen, Inc., provides forecasting, or market sales volume simulation, for new products. The Bases processes, however, are anchored in a 52 week market, and cannot provide information prior to or beyond the 52 week expected picture or prediction.
AC Nielsen and IRI have modeling groups and.access to raw data, and still do not make use of it. These and other modelers of consumer data use aggregate data instead with extremely complex equations having 40-50 parameters. They work with data at the level of a marketing chain. They require 70-80 estimates to aggregate back to national estimate cumulating data. The less that data is, or must be, manipulated the more accurate in character that data. Less manipulated data would be more useful and accurate in providing evaluations, forecasts or expected future performance of a product.
Prior art methods have about fifty parameters to estimate and require regression based adjustments to individual data points as large as a data point. These, conventional modeling methods do not isolate week by week data within a given class of products and thus are not able to provide a true week by week analysis, but instead provide only a more generalized picture at 52 weeks.
For the reasons stated above, and for other reasons stated below which will become apparent to those skilled in the art upon reading and understanding the present specification, it is desirable to develop systems and methods which can afford greater flexibility in analyzing advertising effects and more timely forecasting and analysis of advertising exposure and expected future performance for product sales, in a manner which minimizes the manipulation of data and provides greater accuracy.
The above mentioned problems associated with modeling and analysis of advertising effects and other problems are addressed by the present invention and will be understood by reading and studying the following specification. Systems and methods are described which afford organizations greater flexibility and accuracy in analyzing effects of their current advertising and better forecasting and implementation of proposed strategies and advertising changes.
The present invention in one embodiment is a modeling process which can be used to isolate and document marketing and advertising effects of any kind, including effects of a short-term or long-term nature. The process may also be used to monitor or forecast advertising effects. In addition, the process may be used to simulate a test market for a product. According to the teachings of the present invention, the modeling process uses household panel data. The present invention provides a method for predicting expected sales volume. The three components of market sales volume, market penetration, first repeat and depth of repeat are predicted according to the present invention based on data such as consumer response data from a simulated test market. In one embodiment, these factors are predicted according to the following formula:
Predicted=Exp (S)xc3x97WB.
The same equation is used for estimating all three components of volume, e.g. penetration (the initial purchase), first repeat (the second purchase) and depth of repeat (the third or higher purchase). According to the teachings of the present invention, the modeling process includes determining a slope term from a set of collected consumer panel data. The equation includes three parameters. The first is the slope term (S), which is solved from the data. The second term, W, is an objective count of the number of weeks elapsed since the start of the data string. The third term is the degree of belly in the curve (B), which modifies W to a specific power. This modifier, B, is treated as a constant. For each component of volume, the constant B will be different. B, however, is approximately constant within a given brand or class of products to be analyzed.
In one embodiment, the present invention provides a computer readable medium having computer executable instructions to cause a computer to perform a method for projecting market penetration of merchandise at a predetermined number of weeks since product launch, based on a history of sales from product launch. The method includes retrieving a component of a curve representing B. The method further includes retrieving a component from the curve representing the slope term S. The method includes performing a calculation to produced a predicted or continued value for market penetration using the B component and the slope component in a defined formula, wherein the formula is:
Predicted=Exp (S)xc3x97WB.
A system for facilitating modeling of market sales volume is provided including a server including a database having a number of client files, wherein each client file is an organized client data file including a number of linked web pages which are downloadable and displayable to a client program at a remote client having a graphical user interface. The system further includes an input device coupled to the remote client and on-line to the server. The system includes at least one web page including a data field for entering a parameter for an analysis of a client file and software means operable on the server and the client program at the remote client for performing a method of projecting market sales volume of merchandise at a predetermined number of weeks, W, since a launch of a product, based on weekly data of initial purchases from a launch of a product. The software means is operable on the server and the remote client for generating a curve from weekly sales data wherein the curve plots a set of weekly sales data versus number of weeks from the launch of the product. The software means is operable on the server and the remote client for retrieving a component of the curve (B) representing a degree of belly of the curve, retrieving a component from the curve representing a slope term (S) and performing a calculation for a predicted or continued market sales volume using the B component and the slope component in a formula, wherein the formula is:
Predicted=Exp (S)xc3x97WB.
The systems and methods of the present invention are operable for simulating a value for market penetration, first repeat and depth of repeat for a new product launch using the same formula method.
Prior art methods have about fifty parameters to estimate and require regression based adjustments to individual data points as large as a data point to perform such simulations. The present systems and methods remove the necessity of adjustment. The less adjusted data used in the systems and methods of the present invention provide more accurate simulations. The absence of adjustment is beneficial to the quality of the data. The present model does not adjust or damage data. It utilizes raw data with fewer simpler parameters. The data are therefore more robust.
These and other embodiments, aspects, advantages, and features of the present invention will be set forth in part in the description which follows, and in part will become apparent to those skilled in the art by reference to the following description of the invention and referenced drawings or by practice of the invention. The aspects, advantages, and features of the invention are realized and attained by means of the instrumentalities, procedures, and combinations particularly pointed out in the appended claims.